Sweden and Denmark have unveiled a plan to rescue their struggling flagship carrier SAS, one of numerous airlines hit hard by the coronavirus and its travel restrictions which effectively wiped out all air traffic.
According to the recapitalisation plan presented by Swedish Industry Minister Ibrahim Baylan, the government is willing to inject up to SEK 5 billion ($534 million) into the ailing company. State-owned company Swedavia, which owns and operates ten airports across Sweden, is also set to receive support.
The money, however, comes with an array of stricter environmental requirements, according to Per Bolund. Among other things, the company is expected to reduce emissions in line with the Paris Agreement.
“Sweden will only provide capital to SAS if there are sharp and quantitative requirements for reduced emissions from the company”, Finance Minister Per Bolund of the Green Party told national broadcaster SVT. “We are now entering a new green era for Swedish aviation”, he said, calling the aid package “historic”.
According to SAS, the Danish government is also set to contribute, although no figures have been presented yet.
“SAS is central to both Scandinavia's and Denmark's accessibility, Danish exports and business and Danish workplaces”, Finance Minister Nicolai Wammen said, as quoted by Danish Radio.
SAS estimated that its funding needs some SEK 12.5 billion ($1.35 billion) and plans to provide more details about the recapitalisation and related measures by the end of the month.
The new rescue proposal is yet to be approved by lawmakers before it comes into force. The recapitalisation of SAS also needs to get the green light from the EU.
The Swedish state is today the largest owner of SAS. The planned recapitalisation is expected to further increase state ownership.
Since the onslaught of the coronavirus pandemic, SAS has suffered greatly, having furloughed 90 percent of its staff in mid-March. In late April, it announced it was laying off 5,000 staff, which is about 40 percent of the company's workforce.
Sweden and Denmark have already stepped in to help the airline weather the crisis. At the beginning of May, they agreed to provide a 90 percent guarantee for a revolving credit facility of SEK 3.3 billion ($360 million) so the airline would have more access to cash.
Scandinavian Airlines, most often referred to as SAS, is the flagship carrier of Denmark, Norway, and Sweden. The company is headquartered in Solna, Sweden and prior to the crisis operated some 180 aircraft to 90 destinations. Its main hubs are Copenhagen Kastrup, Stockholm Arlanda, and Oslo Gardermoen.